Chemical National Bank of Chicago v. City Bank of Portage

Mr. Justice Gary

delivered the opinion or the Court.

February 15, 1894, Charles E. Braden, who in fact was then the cashier of the Chemical Bank, made and delivered the following note:

“ $5,000 Chicago, III., Feb’y 15, 1894.

Four months-days after date I promise to pay to the order of Theodore Wetmore five thousand dollars at Chemical National Bank of Chicago, value received, with interest at the rate of six per cent per annum after due. having deposited with this note, as collateral security, certificate No. 477 for fifty shares stock of Chemical National Bank of Chicago, par value $100 per share, which said security or any part thereof, I hereby give the legal owner or owners authority to sell on the maturity of this note, or at any time thereafter, or before, in the event of said security depreciating in value, at public or private sale, at his discretion, without advertising the same, or giving me any notice, and to apply so much of the proceeds thereof to the payment of this note, as may be necessary to pay the same, with all interest due thereon; and also to the payment of all expenses attending the sale of said collateral security; and in case the proceeds of the sale of said collateral security shall not cover the principal, interest and expenses, I promise to pay the deficiency forthwith after such sale, with interest at six per cent per annum. And it is hereby agreed .and understood that if recourse is had to said collateral, any excess of collateral upon this note shall be applicable to any other note or claim held by said owner or owners against me, and in case of any exchange of, or addition to, the collateral above named, the provisions of this note shall extend to such new or additional collateral.

O. E. Braden.”

Wetmore indorsed the note “ without recourse” and the City Bank sues, holding the note.

There is no uncertainty about the facts. The Chemical Bank wanted the money, and Braden, with the advice and consent of the president and assistant cashier of the Chemical Bank, made the note and pledged the fifty shares of stock, which in fact did belong to the Chemical Bank, and got the money for its own use. Braden had no interest in the whole transaction.

The Chemical Bank shows how it acquired the stock, and objects that the mode was ult/ra vires; but what possible difference can it make between these parties whether the transaction by which the Chemical Bank obtained the stock, be defensible or not? It had the stock, and borrowed money on it, and how it got it can be of interest to the City Bank only if somebody else shall claim it. The note was the note of the Chemical Bank, being made in the form determined by the officers of that bank, and to secure the repayment of money borrowed for the use of that bank. And the City Bank holding the note under a blank indorsement, was entitled to sue upon it. The judgment is affirmed.